Wednesday, May 24, 2006

Will rising gas prices bust the toll road boom in Texas?

Bexar County Commissioner Tommy Adkisson doesn't care much for toll roads anyway, but now he has a new worry.

Perennially high gas prices could prove to be a sure damper for growing traffic congestion as motorists flee to buses, double up more often in their cars and move closer to jobs.

And without congested streets, toll lanes are money losers. Drivers won't pay toll fees if they can get somewhere just as fast on free roads.

So with gas prices expected to remain high through next year and global production of conventional oil projected to peak in two to four decades, if not sooner, what could toll-road planners be thinking, says Adkisson, who sits on the Metropolitan Planning Organization board.

The board has approved plans for 75 miles of toll roads in San Antonio, and those projects could each have bond paybacks of 40 years or so — plenty of time for high gas prices to sabotage good intentions.

"Come on, it's just a matter of time before it goes to $4," Adkisson said.

And if that time comes, many toll projects could be doomed.

Adkisson is trying to get the planning board to plan now for those impacts. This week, he asked the rest of the board to consider doing a study on how gas prices could change driving habits and what the implications would be for upcoming highway projects.

"The more we sweat right now, the less we'll bleed later," he said. "I don't think we should immerse ourselves in the more grandiose forms for infrastructure. I think toll roads are pretty grandiose."

The matter is at least worthy to discuss, said City Councilman Richard Perez, who chairs the planning board. The issue could be on next month's agenda.

"I'm open to whatever the policy board is interested in discussing," he said.

Adkisson isn't just culling numbers off the Internet to feed his fears.

The U.S. Energy Information Administration predicts production of conventional oil could peak in 2037, while a U.S. Army Corps of Engineers report last September said that could be happening now — or about to.

It will take more than a decade to mitigate increasingly short oil supplies, says a study sponsored by the U.S. Energy Department.

Toss in insatiable growth in China and India, tensions in the Middle East and lack of refining capacity and gas prices — now averaging $2.88 a gallon nationwide for regular unleaded, according to AAA — could continue to soar, some say.

"There is good reason to believe that we are at the start of a long, steady climb in the price of gasoline," said local transportation consultant Bill Barker, who arms toll critics with data. "In fact, we seem to be right on track with a prediction by CIBC World Markets for $100-per-barrel oil by 2010, which should put gasoline at $3.50 per gallon in the near future."

The Energy Information Administration, which is notorious for low-balling its estimates, is much more positive. Officials project prices will stay high through next year, drop and then end up at $2.19 a gallon by 2030 — in 2004 dollars.

"I wouldn't bet on it," one agency official confided.

A better bet, the official said, would be to go with the agency's high-price scenario, which puts gas at more than $3 a gallon by 2030 — also in 2004 dollars.

That could jeopardize toll revenues needed to pay off bonds for two Austin-area toll projects — Texas 130 and Highway 183A, both slated to open next year.

Bond statements by Vollmer Associates assume gas prices won't top the U.S. peak set in 1980, which, when adjusted for inflation, would be more than $3 a gallon in 2005. Average daily prices last September reached $2.92 in Austin and $3.06 nationwide, AAA said.

Vollmer officials didn't return phone calls.

Nevertheless, Cherian George, head of transportation at Fitch Ratings, which rates the creditworthiness of bonds, said he isn't alarmed.

When gas prices spike, as they did after hurricanes Katrina and Rita smashed Gulf Coast oil rigs and refineries last year, motorists will drive less, but price upswings would have to be much more significant to put toll roads at risk, he said.

That's because people will cut vacations and other side trips before doing away with their commutes, George said.

"People have to get to work," he said. "Other discretionary or less essential choices will have to be done away with."

Results last fall were mixed for toll roads.

Two New Jersey toll roads lost millions of dollars in toll collections because of rising gas prices coupled with a winter storm, the Asbury Park Press reported. But Harris County Toll Road Authority officials said that, aside from a dip in September when Houston was evacuated, toll-road use has grown unabated.

Nearly nine of 10 Americans changed their behavior when gas prices were rising last fall, according to a survey done for the Urban Land Institute.

The most common change was combining stops into one trip, followed by eliminating non-commute trips, buying a fuel-efficient car, bicycling and walking more, considering moving closer to work, sharing more rides and riding buses or trains more.

In San Antonio, people flocked to the buses. From October through March, ridership jumped 12.9 percent compared with the same time the year before, VIA Metropolitan Transit officials said.

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